California unemployment rate falls to 8.1% despite drop in payrolls

Orange County’s unemployment rate edged up to 5.8% in January from 5.3% in December and employers there saw a net loss of 20,200 jobs. Above, construction workers at an Irvine tract.

Orange County’s unemployment rate edged up to 5.8% in January from 5.3% in December and employers there saw a net loss of 20,200 jobs. Above, construction workers at an Irvine tract. (Mark Boster, Los Angeles Times)

Ricardo Lopez

If ever there was a mixed jobs report with conflicting indicators, Friday's was it.

The California Employment Development Department reported that state employers shed nearly 32,000 net jobs in January, the first monthly loss since June 2011. Despite the drop in payroll jobs, the unemployment rate fell to 8.1% from 8.3% the month before.

To further muddle the report, the state also revised previous years' job growth estimates. New figures show that California added an average 204,000 more jobs than previously estimated in 2013, growing at a rate of 3%. That's nearly double the rate than the EDD had previously reported.

So how does one interpret the data?

To start, economists always point to the long-term trend to get a clearer assessment of the economy's health because month-to-month changes are often volatile and usually revised.

Part of the discrepancy in the monthly jobs report, economists said, can be attributed to how the unemployment rate and payroll data are gathered. The jobless rate is tabulated based on a sample of households while the payroll figure takes in a larger sample of businesses.

"All along … we were saying that the monthly numbers were underestimating the monthly job gains," said Esmael Adibi, director of Chapman University's A. Gary Anderson Center for Economic Research. "I have every confidence [January's] payroll number is going to be revised."

The U.S. economy, Adibi pointed out, added a revised 129,000 jobs in January. "I see a lot of inconsistencies here [in the California numbers].... The unemployment rate and payroll employment, these two do not sync."

Data also released Friday by the U.S. Labor Department underscores that point. The federal agency reported that for January and February, American employers added a total of 304,000 jobs and the national economy appears to have avoided a winter lull in hiring.

"We should have had a share of that," Adibi said. "It doesn't make sense."

Friday's survey of California employers found that five sectors eliminated jobs in January. The biggest loss was notched in the trade, transportation and utilities sector, which as a whole dropped nearly 14,000 jobs, primarily in retail trade. The volatile information sector, which includes the film and television industry, contracted by nearly 13,000 jobs.

Professional and business services, which includes well-paying occupations such as lawyers and accountants, posted the largest gain, expanding by 8,300 positions.

The household survey showed an increase of 21,000 people in the state's labor force, a signal that more job seekers are feeling confident enough to resume looking for work.

"People are coming in looking for jobs rather than leaving," UCLA senior economist Jerry Nickelsburg said.

Nickelsburg said it's possible some statistical aberrations are clouding the job data for January, but that any weakness in the U.S. economy would probably show up in California.

"The bottom line is it's a mixed picture," he said. "We still have slow growth eating away at our unemployment rate."

The stronger-than-expected job growth last year is good news for job seekers like Michael Chandler, a 54-year-old downtown Los Angeles resident. The former telephone salesman said he was laid off last month because of slack work conditions.

He has spent his days looking for work, and so far has been on a handful of job interviews. He's had no luck so far, but he said "things are looking up."

In Southern California, several counties saw their jobless rates rise. Orange County's unemployment rate edged up to 5.8% from 5.3% in December and employers there saw a net loss of 20,200 jobs.

The Inland Empire, which includes San Bernardino and Riverside counties, shed 25,200 jobs in January and its jobless rate jumped nearly one percentage point to 9.5% that month.

Los Angeles County, the only county for which the jobless rate is seasonally adjusted, saw an improvement in the number of people with work: The unemployment rate fell to 8.9% from 9.2% in December. That's despite a net loss of 62,600 jobs, according to state employment data.

Robert Kleinhenz, chief economist at the Los Angeles County Economic Development Corp., said he expects job growth to pick up this year.

We're "finally beginning to really get back to a normal state of affairs," he said. "The state economy and the local economies have all been performing better than we originally thought"